Global stocks up on Japanese, European data

TOKYO: Stock markets had an upbeat start to the week after stronger-than-expected economic data from Japan and the eurozone. Attention is likely to focus this week on Friday’s release of US growth data, as investors adapt to expectations the Federal Reserve will hike interest rates in December.

Germany’s DAX gained 0.9 percent to 10,808 and France’s CAC40 was up 0.8 percent to 4,572. The FTSE 100 of Britain rose 0.2 percent to 7,031. US shares looked set to rise, with Dow and S&P 500 futures up 0.4 percent. Japan posted a trade surplus of 498.3 billion yen ($4.8 billion) in September, compared with a deficit of 18.7 bil- lion yen in August. While exports fell 6.9 percent from a year earlier, pulled lower by anemic demand for autos and machinery, that was better than the forecasts for a decline of more than 10 percent.

Meanwhile, a preliminary survey of factory managers showed a fifth straight month of improvement in manufacturing sentiment and the measure for output rose for the first time since January. The bond yields at which governments in Europe’s debt-ridden southern countries fund their budget gaps were also sharply lower, 10-year bond yields falling 5 basis points in Spain and 15 in Portugal after a ratings decision seen as crucial to keeping the European Central Bank buying Lisbon’s bonds. A 2.5-percent rise for European banking stocks and strong readings from German and eurozone purchasing managers helped the continent’s major stock markets all gain robustly.

Spain edges up

But the IBEX outstripped its German and French equivalents with a 1.4 percent rise. Spain’s conservative leader Mariano Rajoy was on course to secure a second term in power for his People’s Party (PP) after the Socialists agreed to abstain in a confidence vote this week, ending an impasse stretching back to elections last December. “In the very short term, the formation of a government is good news for Spanish spreads,” Rabobank analysts said in a morning note. “However, in the medium term Spain will still be left with a minority government that is likely to face an uphill struggle to pass any legislation.”

Wall Street was set to open higher , pushing indexes back towards all-time highs. Europe’s have recovered from threeyear lows hit in February as the US economy improves and central banks globally continue to pump cash into the system.

CORPORATE ACTIVITY

Political risks have moved to the top of the agenda, with Britain’s vote to leave the European Union upping the stakes further for German and French elections next year while offering investment opportunities through a sharp weakening of the pound. But the surfeit of cash sitting in multinationals’ bank accounts is also beginning to show up in some major merger and acquisition deals, with AT&T Inc’s $85.4 billion deal to buy Time Warner Inc among the latest.

“We have seen a stronger open this morning after more corporate activity in the US, which will help the media names in the session,” said Atif Latif, director of trading at Guardian Stockbrokers in London.

“Also French Connection private equity talk is helping M&A activity (and) this will become a theme given the advantages of the FX weakness allowing more UK listed names to become attractive targets.” The US growth figures due Friday for the July-September quarter will no doubt be “the highlight of the week,” Chris Weston of IG said in a commentary. “Keep in mind that growth has averaged around 1 percent in the past three quarters, so a snap back to the consensus estimate of 2.5 percent would be welcomed.”

Asian stocks also gained after a sluggish end to last week on Wall Street while China’s yuan currency neared 6.80 per dollar, levels not seen in six years and which Beijing intervened heavily to defend in January. MSCI’s broadest index of Asia-Pacific shares outside Japan inched up 0.2 percent. Japan’s Nikkei moved in a tight range and was last up 0.2 percent while Shanghai outperformed, rising over 1 percent.

The Shanghai Composite index led gains, adding 1.2 percent to 3,128.25, while Hong Kong’s Hang Seng jumped 1 percent to 23,604.08. They were bolstered by reports that China’s banking watchdog called for stricter oversight of the real estate market and controls on risks related to industries with excess capacity and local government debts.

Japan’s Nikkei 225 rose 0.3 percent to 17,234.42. South Korea’s Kospi climbed 0.7 percent to 2,047.74 and India’s Sensex advanced 0.4 percent to 28,191.88. Australia’s S&P ASX 200 fell 0.4 percent to 5,408.50. — Agencies